Apple's (AAPL) potential launch of its Apple Intelligence in China is the "key to the long-awaited growth catalyst" in the region, Wedbush Securities said in a note Friday.
The firm said that based on its estimates, more than half of the roughly 200 million iPhones in China "are in the window of an upgrade opportunity" and Apple Intelligence, which was launched on iPhone 16, has been a catalyst for upgrades in the US.
Wedbush said China has been a "major headwind" for Apple, with the company losing some share to Huawei over the past year. Apple's deal with Alibaba (BABA), with Baidu (BIDU) also playing a role, to launch iPhone AI in China reportedly in early May, is expected to turn the tide, according to the note.
"We believe starting in the June quarter, growth returns to this flagship region with easier comps going forward into [fiscal year 2026]," Wedbush analysts, including Daniel Ives, said, adding that despite US-China tensions, they believe that Apple can balance its growth strategy in China as shown by the AI deal with Alibaba.
Wedbush maintained Apple's outperform rating and $325 price target.
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